Blog:Opel Magna deal uncertainties

It would seem that negotiations between Magna and GM have hit some choppy waters. GM is reportedly concerned over giving away too much technology to Magna and a prospective Opel/Vauxhall Mark 2 with its Russian connections. There's also the issue of carving up territories for future Opel sales. GM is wary of creating a monster that hurts its own future chances in key markets.

Is the deal really moving towards being off? I somehow doubt it. The German government is still right behind Magna's bid and has already provided bridging finance and loan guarantees for Opel. Berlin is not seeking to fuel the press speculation about other bidders being invited back to the table, though it has been acknowledging that we don't have a done deal yet.

But it looks like there has been a bit of press manipulation emanating from Detroit. Anonymous sources said to be close to events are popping up everywhere. By creating the impression that the deal is far from done and that other bidders are very much in with a chance, GM puts added pressure on Magna in the negotiations. But if the Magna consortium bid does unravel, a whole load more uncomfortable questions get asked about other bidders, Berlin has a heart attack and, apart from anything else, even more GM management time likely gets diverted to the Opel/Vauxhall sale. They have more than enough on their plates in the Ren-Cen at the mo.

The competition for Opel/Vauxhall is still not over, but Magna's consortium is still by far the front-runner due to its strong backing from Germany - government and labour unions. Marchionne may look on with interest, but his bid caused much consternation in Germany before and would do so again. If holding company RHJ has really improved its offer, it may well get a hearing, but it should be wary of being 'used' by GM as a lever to chivvy Magna. Oh, and by the way, RHJ has just posted a big loss suggesting it's perhaps not really in position for anything more than a small role or stake. Beijing Auto? I don't think so.

That said, if a seismic shift is coming, and Magna is really on its way out, expect an announcement very soon. Time is short. The German government needs to be on-side. And Opel is already eating into bridging finance.

Given the startling complexity of obtaining a journalist visa for China - the code 'J2' is now indelibly stamped on my mind - it was with some surprise how swiftly I managed to sail through airport im...